A bad idea: Subsidizing ‘good people’ who make poor decisions

My take on the news

Posted
Thursday, March 21, 2013 1:00 pm

Lonnie Barham

FORECLOSURE MEDIATION: The federal Home Affordable Modification Program, created in 2009, attempts to get banks and other mortgage lenders to modify mortgages that are in foreclosure by reducing the principal owed or making other modifications that will prevent foreclosure. The special master for Rhode Island, Merrill W. Sherman, is handling 740 such cases. The program’s arbitration guidelines for mortgage modification call for banks to reduce outstanding mortgages to only 120 percent of current home value, regardless of the total mortgage originally agreed to. Ms. Sherman agrees that “...some of the plaintiffs are ‘gaming’ the system,” yet she still thinks banks should forgive a tremendous amount of loan principal because most plaintiffs “...are good people who for a variety of reasons overreached (aspired for homes they couldn’t afford; were naive in thinking the market would rise forever, etc.) and are now suffering consequences in some ways not of their making.” She justifies that banks should lower mortgage principal in foreclosures because they already spend thousands of dollars on each case in legal expenses.

Using Ms. Sherman’s logic, the stock market should return to investors a large percentage of what they lost in the recession when they made bad investment decisions. And the stock market should agree to send this money back to bad investors because fighting it would cost so much in legal fees. Another analogy might be expecting a supermarket to charge some customers only half what they owe at the checkout counter, simply because those customers are “good people” who made bad decisions with their money (big homes, expensive cars, etc.) and now cannot afford to pay for all their groceries.

When government coerces private enterprises to subsidize customers’ bad decisions and reduce their profits in the process, the free market system that made this country so successful is doomed. It is common for government to subsidize people’s economic failures (food stamps, welfare, etc.) and to subsidize failing entities (bailouts, stimulus program, etc.). Though we may disagree with it, at least it spreads the cost across all taxpayers. When government forces businesses to subsidize people’s bad decisions, it constitutes officially sanctioned robbery as practiced in totalitarian countries. How long before this “take from those who made good decisions and give it to those who made bad decisions” places our country in the same league as the former Soviet Union and current countries like Cuba and Venezuela?

RHODE ISLAND’S GUN LAWS: The prestigious Journal of the American Medical Association (JAMA) has issued study results that show Rhode Island has the eighth strongest gun laws in the country. Most important is our requirement for all gun purchases to include a background check. Many consider our current and extensive gun laws to be draconian compared to most other states. JAMA’s study seems to support this position. Any additions to our gun laws, other than a provision that strengthens the process for determining whether a prospective gun buyer has a history of mental illness, will constitute an unnecessary burden to law-abiding citizens without serving to decrease gun violence.

GOD AND THE HIGGS BOSON: Scientists at Europe’s Large Hadron Collider have declared success; that the particle detected a few months ago following super high-speed collisions of atoms is indeed the Higgs Boson - or, as many in the news media (and some scientists) call it, the “God Particle”. It’s ironic that humans just can’t let go of religious superstition, even when describing an event that is the result of pure science. Existence of the Higgs Boson proves the Big Bank theory of the creation of the universe which is a direct contradiction of the religious teachings that God created the universe as described in the Bible. Yet, we still insist on calling the Higgs Boson the God Particle. Will superstition always reigns supreme among humans?

THE TYRANNY OF SPEAKER FOX: We all know that House Speaker Gordon Fox is the most powerful politician in Rhode Island. Our archaic system of government gives far too much authority to his position than does government in most states. This was driven home last week when Fox arbitrarily removed Representative L. Patrick O’Neill from the House Judiciary Committee simply because O’Neill had engineered a unanimous committee vote that approved sending the controversial ethics bill to the house floor for a vote. Adding to the insult, Fox had the committee chair declare that the approval vote was null and void. The bill itself is a bad one that should be voted down by the House. Bad or not, however, any bill that receives majority support in a committee vote should be allowed to go to the entire house membership for consideration. That’s democracy. Instead of democracy, however, in Rhode Island we get the tyranny of the house speaker. Perhaps it is time for a constitutional convention so we can change our government structure to eliminate the excessive power that allows this one-man tyranny to rule our state house.

BUNGLING OF MILITARY MEDALS: How many ways can one administration bungle things? We’ve grown accustomed to the Obama administration bungling the budget deficit year after year and adding enormously to the national debt. Additionally, we have become somewhat inured to Obama frequently disregarding the Constitution, purposely violating the laws of Congress, and stretching the truth with the American people. What we were not prepared for was Obama’s outgoing secretary of defense, Leon Panetta, directing the military to create a new medal, to be called the Distinguished Warfare Medal, for award to far-behind-the-lines drone pilots and to rear echelon cyber warfare specialists. There’s nothing wrong with such military members receiving medals for outstanding performance in a safe, rear area - usually here in the U.S.; but there are already many medals that would serve that purpose wonderfully. The problem with this new, boneheaded idea is that the new medal is being placed above medals issued strictly for battlefield performance and bravery - such as the Bronze Star, the Soldier’s Medal and the Purple Heart. Everyone is up in arms about it, from the VFW and other military service organizations to numerous members of Congress. And, because of this uproar, it’s very likely the new secretary of defense, Chuck Hagel, will either abandon the medal or place it lower in precedence behind battlefield medals. What’s still amazing, however, is that the Obama administration could have once again bungled something so badly.

WASTE, FRAUD AND ABUSE AS ECONOMIC GROWTH ENGINE: The “Block Report” on Medicaid and food stamp fraud and abuse in Rhode Island that was reluctantly released last week by Governor Chafee reinforces the notion held nationwide that Medicaid and the food stamp program are rife with fraud throughout the country. Assuming the fraud detected in Rhode Island is reflective of fraud nationwide, our country is losing billions and billions of dollars every year on these programs. So, why hasn’t there been some major attention paid to this issue? Left-leaning economists and their big-government adherents tell us the many extra billions of dollars in fraud that are funneled through the two programs serve as a “growth engine” for our economy by adding to the nation’s spending. What a crock! Those fraudulently spent dollars, if not taken excessively from our taxpayers, would still be spent; but they would be spent by those who actually earned the money instead of by those who steal from these necessary programs. Meanwhile, those responsible for overseeing the programs give tacit approval to this theft by silently watching from the sidelines and doing nothing to stop the travesty. Governor Chafee says he is taking behind-the scenes action to stop the fraud. That “The feet under the duck are paddling away.” Well, if the duck is paddling so hard, why hasn’t the fraud-fighting fowl moved at all? Let’s hope the real Chafee doesn’t agree with the economists and big government activists who believe social program fraud provides a boost to the economy?

QUOTE OF THE WEEK: At a gathering of conservatives, Wisconsin Governor Scott Walker pleased the crowd when he said, “In America, we believe in the people and not in the government. It is precisely why, in America, we take a day off on the Fourth of July to celebrate instead of on April 15th.”